Which 1998 sovereign default helped trigger the global market turmoil associated with Long-Term Capital Management?

The Russian government default in 1998 helped trigger global market turmoil associated with Long-Term Capital Management.

On August 17, 1998, Russia devalued the ruble, restructured domestic debt, and announced a moratorium on some foreign debt payments. Investors who had assumed that Russian government obligations were relatively safe faced unexpected losses, and risk aversion spread across international markets.

The shock severely damaged Long-Term Capital Management, a highly leveraged U.S. hedge fund with large positions in bonds and derivatives. The Federal Reserve Bank of New York helped coordinate a private-sector rescue in September 1998, although the central bank did not directly bail out the fund. The episode demonstrated how leverage and interconnected financial contracts could transmit stress far beyond the country where a crisis began.